Easy to preach, harder to do

Free markets have the cure for poverty, maybe, but politicians have voters

THE bankers at an investment conference tried to sound bullish. One day, they said, Romania might catch up with the European Union. New technologies are taking hold. Some factories in Bucharest and in Transylvania, the western province, look as sleek as German ones. Use of credit cards, mobile phones and the Internet is rising fast. The economy should grow respectably this year. Inflation may dip below the target of 22%. Many outsiders see Adrian Nastase's proclaimedly free-market government as Romania's most promising since it discovered democracy.

Alas, that is not saying much. A standard view in Brussels is that, while other Central Europeans should join the EU in 2004 or 2005, Romania will have to wait until 2012 at the earliest. Corruption and poor infrastructure, made worse by recent floods, hold it back. The courts and roads alike are rotten. A third of all Romanians live in poverty. The rural poor can subsist on what they grow. The urban poor have a tougher time of it.

Take Gara de Nord, a working-class Bucharest district one metro stop from the prime minister's office. At first glance, it appears to be moving up in the world. The railway station at its heart has been cleared of beggars and prostitutes. A French hotel chain, Ibis, has done up a once squalid property nearby. A Daewoo car dealership, an Orange mobile phone shop and a 24-hour McDonald's now mark out the neighbourhood's corners. Even street dogs, which used to roam in packs, now move about furtively in ones and twos. But grinding poverty has not gone away.

Ioana Breaza, 57, and her four-year-old niece live in one room across the road from the McDonald's. They share her courtyard's single open latrine with 20 others. The state gives her $22 a month for disability and child care, not enough to get a large lump in her breast examined or to send her niece to kindergarten.

Gianina Radu, 37, lives around the corner, in a broken-down, rat-infested tenement. Her two rooms are dingy but neat, the walls adorned with cheap icons of her favourite saints. Her husband earns $70 a month as a foreman of a flower stall. She gets another $18 in state benefits. They have four children, the oldest aged 20, the youngest four. Gas, electricity and water cost all her husband's salary in the winter and half of it in summer.

That is, if the Radus paid. They don't: like many poorer Romanians, they wait to be cut off. Mrs Radu is glad to see the new businesses in the district, but thinks they are “just for the rich”. Constantin Alexandrescu, who runs a scissor- and knife-sharpening shop in front of Mrs Radu's tenement, is more hopeful. He charges 40 cents to repair scissors, 30 cents to sharpen knives. That is a lot for locals, he admits, “but then everyone needs a sharp knife.” He reckons to make $110 a month, enough for his wife and two children to get by on. “But not enough for a Big Mac,” he grins, waving his oil-stained hands.

Can Mr Nastase, a former Communist turned social democrat, do more for the poor? His government has raised the minimum wage to about $50 a month and has promised to put up pensions. But it has no spare cash to improve health care or education for the poor. Barely a fifth of Romanians pay income tax. Plans to increase revenue by lowering taxes but getting them paid will take time. On the spending side, cut more jobs in state companies—in the oil industry, notably—urge the IMF and World Bank. But in the short run, that means more people out of work, and Mr Nastase is not a banker or a development economist, but an elected politician. His government, balking at the social cost, thinks it has done enough already.